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The situation

Sheryl is in her late 60s and happily married. When her mother passed, she left behind an estate Sheryl claims is worth $2.2 million. The farm property is held in a trust, according to which the assets are to be split evenly between Sherly, her brother and sister.

However, Sheryl’s siblings have invested in the property, adding some buildings over time. And that’s created disagreement about a fair split. “How is that [equal split] fair if they put money into it and you didn’t?” Ramsey asked.

He said he believes the siblings and mother should have outlined specific terms about how the estate would be divided, given the fact that some have contributed more than others.

“Let me tell you, the whole idea that they would build a building on someone else's property without having everything lined out in the trust in detail was pretty stupid because it sets up a big argument,” he contended.

A lack of estate planning is pervasive. As of 2023, only 34% of all Americans had wills, according to Caring.com’s 2023 Wills and Estate Planning Study. About 40% of the remainder without wills said that a medical diagnosis would encourage them to make an estate plan, but roughly one in four said “nothing would motivate” them to do so.

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The solution

Ramsey said he believes the trustee (Sheryl’s brother) is legally mandated to follow the trust terms and split the assets evenly. However, trusts are complex structures and the level of flexibility a trustee has depends on the trust’s terms and state laws.

Nevertheless, Ramsey believes the siblings could come to a mutual agreement on a split that they would accept as fairer. For instance, they could separate the fair value of the properties built by the siblings over the years and then split the leftover value equally.

Ramsey said this would be the “ethical” solution.

All adults should have a will

Then there is the general question of who should write a will.

“If you're 18 years old or older you need a will, period!” Ramsey said. “It's what grown-ups do, and by the way, the government's going to end up with a bunch of this, too, if you don't.”

Depending on the size of the estate, beneficiaries might owe estate taxes on a state or federal level. A formal plan could potentially minimize this tax liability.

You can also minimize liability and confusion by updating the will everytime there’s a major life event. Sheryl’s family, according to Ramsey, should have revised the trust when the siblings invested in the property with new additions.

In fact, the Ramsey team and his family get together every year for a meeting titled “If Dave Dies This Year.”

“We sit and talk about my death for an hour and a half,” he said, “[and about] what has changed since last year in the operation of Ramsey.”

Ramsey’s net worth is estimated at $200 million with a reported $150 million in real estate, according to TheStreet. Given that kind of nine-figure wealth, an annual succession planning session isn’t just pertinent; it could prove the best path to avoid the kind of infighting Sheryl’s family has dealt with since losing their mother.

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About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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